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India Macro Weekly: Industrial growth strong, inflation softens

For the fortnight ending February 24, 2018:

Two inflation data points were released during the past fortnight – CPI and WPI. Both components showed a comeoff in inflation. While CPI inflation fell to 5.07% in January, 2018 after hitting a 16 month high during the previous month (5.21%), it still remained stronger than the levels seen during January, 2017.

WPI inflation, on the other hand, not just fell to sub-3% levels of 2.84% in January, 2018, hitting a 5 month low, it was also lower than the level seen during the same month of the previous year.

At 7.1%, IIP growth continued to remain strong for the second month running in December 2017, even as it softened from the previous month’s high. Manufacturing, capital goods and consumer goods drove production, while all other components showed middling growth, at best.

Cumulative FDI inflows came in at USD 48.2bn for the April-December, 2017 period, showing virtually no change from the corresponding period of the previous year. This, is on account of a significant decline in inflows during Q3, 2017-18 compared to the previous quarter.